Infratil: Vodafone to sell passive tower assets and reinvest IFT (PDF, 119.44KB)

July 18, 2022

Vodafone to sell passive mobile tower assets alongside Infratil reinvestment

Vodafone New Zealand Limited (“Vodafone NZ”), together with shareholders Infratil Limited (“Infratil”) and Brookfield Asset Management Inc. (“Brookfield”), announce the sale of the passive mobile tower assets of Vodafone NZ for 1,700 million to funds managed, or advised, by leading global investors InfraRed Capital Partners (40%) and Northleaf Capital Partners (40%). This represents a pro forma EBITDA multiple for FY2023 of 33.8x1.

As part of the transaction, Infratil will reinvest to own 20% in the new TowerCo.

The new TowerCo venture comprises 1,484 wholly owned mobile towers and will be New Zealand’s largest tower company, covering over 98% of New Zealand’s population.

Under the terms of the agreement, which is subject to Overseas Investment Office approval and the completion of certain reorganization steps, the new TowerCo will enter into a 20-year master services agreement with Vodafone NZ (with extension rights) allowing Vodafone access to both and new towers, and a commitment from TowerCo to build at least 390 additional sites over the next ten years to improve Vodafone’s relative coverage and capacity position.

Vodafone will continue to own the active parts of its network, including radio access equipment and spectrum assets, maintaining state-of-the-art mobile coverage and network position.

The new TowerCo structure allows for separate and specialized ownership of passive mobile towers, providing strong incentives to improve capital efficiency, which will include increased co-location of equipment on common tower assets. This is essential as the demand for data and connectivity continues to grow year on year, which reinforces the importance of a more intensive digital infrastructure to meet the needs of the community. This will allow Vodafone to focus on its main strategic objectives, accelerating the deployment of active network technology.

Infratil Chief Executive Jason Boyes said, “We are delighted with this result, which again underlines why Vodafone is an excellent investment by Infratil. We unlocked a significant portion of the value of our equity originally invested in Vodafone, while retaining that investment and % stake in TowerCo. InfraRed Capital Partners and Northleaf Capital are high caliber investors who share our vision of what the new TowerCo can bring across New Zealand. The transaction is a win-win for Infratil’s shareholders.

Brookfield Infrastructure Managing Director Udhay Mathialagan said: “This transaction is an important step in executing our strategic program to increase the utilization of Vodafone NZ assets, freeing up capital from the network when it matters. direction and that the conditions are favorable and thanks to targeted partnerships around the infrastructure. . This partnership will improve site choices for wireless operators in New Zealand while supporting a strong return on our equity invested in Vodafone NZ three years ago.”

1 EBITDA guidance for FY23 presented on a cash basis and not adjusted for IFRS 16.

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Jason Paris, CEO of Vodafone, said: “We are delighted with the outcome of the process, which has generated considerable interest. Infratil, InfraRed Capital Partners and Northleaf Capital are exceptional investors who share our vision for Aotearoa New Zealand and will help us accelerate deployment. critical infrastructure for our customers.”

“This is a move that will further increase our network coverage, capacity and speed for our customers, making our smart network even smarter, which was recently voted New Zealand’s number 1 mobile network by the independent benchmarking company Umlaut.

Morrison & Co’s Chief Investment Officer and Global Head of Digital and Connectivity, Will Smales, said, “TowerCo represents a great opportunity for Infratil to invest in a unique, established and difficult-to-replicate national tower network with strong partners.

“What makes Infratil an attractive asset is that although it has long-term inflation-linked cash flows, it is also a platform with significant growth opportunities, including the macro-tower growth, future colocation capacity, increased demand for new points of presence, and exiting opportunities such as small cells.”

The transaction is expected to close in the fourth quarter of calendar year 2022, subject to receipt of approval from the Overseas Investment Office.

Estimated impact on guidance for fiscal year 2023

On May 19, 2022, as part of its annual results announcement, Infratil provided a prorated EBITDAF forecast for fiscal year 2023 from continuing operations of between $510 million and $550 million.

This included Infratil’s 49.95% share of Vodafone’s statutory EBITDAF of between $490 million and $520 million from continuing operations. This is not expected to change materially due to the accounting treatment of lease payments to TowerCo, which will be accounted for in interest and amortization.

Returns to shareholders

In May 2019, Infratil and Brookfield each acquired a 49.95% stake in Vodafone NZ for NZ$1,029.7 million. Based on the independent valuation as of March 31, 2022, Infratil expects to have generated an IRR of 26.7% on its investment in Vodafone following the closing of the transaction.

No incentive fees are payable to Infratil’s manager, Morrison & Co, in respect of investments in Vodafone NZ or Aotearoa Towers Group LP.

Inquiries should be directed to:

Matthew Ross

Chief Financial Officer of Infratil

Phone: +64 274211152

Email: [email protected]


Infratil Limited published this content on July 17, 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unmodified, on Jul 17, 2022 8:53:06 PM UTC.

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